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[clarky]

Time to change strategy Phil, your current one has had a week.

 

[wolffy66]

Ten posts a year and everyone is a gem.

Thank you

 

[James Sawyer Ford]

That's not how acquisitions work. They already have the assets on their books and don't need to "make the money back"

They had to pay a premium for those assets, so it’s not like that’s a fair market value

They certainly want an ROI overtime, otherwise if the cash flows are collapsing so will the book value

 

[mayham2199]

Why would they not care about hardware? Selling more hardware would result in more money for them.

Yes but they can't sell more hardware that's the problem. In fact they are selling less hardware than ever (except the original Xbox). So they've decided to switch gears and focus on other areas where they can grow Xbox. They'll continue to support\release hardware but it's clear that they are focusing on growing in other areas and will keep the hardware around to continue pulling in revenue from the users who are still committed to that ecosystem.

 

[RetroGamingUK]

Well, they should finally have a steady stream of games, but if those games perform like Ara, Hellblade 2, RedFall, Shattered Space, Hi-fi and Forza (so, basically all of their releases) they are cooked. Avowed looks like a AA game. And Indiana Jones is like an ill-conceived game, and with the further decline of their hardware. How are those exclusives supposed to perform; have a chance to make money on a dead platform

shit. you are damn right. they better speed up those PS5 ports PRONTO!!!

What’s bizarre is that in spite of their Bethesda and Activision acquisitions, it’s Fable, Perfect Dark and Gears E-Day seems the most intriguing to me.

These releasing on PlayStation will be even more bizarre.

 

[kyussman]

I said it the other day,but Xbox are in such a weird place right now......they keep grinding away though......because Microsoft.

 

[digoutyoursoul]

Yes but they can't sell more hardware that's the problem. In fact they are selling less hardware than ever (except the original Xbox). So they've decided to switch gears and focus on other areas where they can grow Xbox. They'll continue to support\release hardware but it's clear that they are focusing on growing in other areas and will keep the hardware around to continue pulling in revenue from the users who are still committed to that ecosystem.

That’s the problem, they don’t seem to address the issues as to why they can’t sell hardware. The same people remain and they switch strategies to see what sticks, using their allies/paid lackeys in the media to appear to support whatever it is they do next.

And it’s a shame because if they got their act together they could have an excellent alternative to PlayStation that I believe would do better in the market.

 

[GHG]

Time to change strategy Phil, your current one has had a week.

At least let them celebrate the COD numbers. They won't have seen anything like it since Halo in its hayday.

 

[ChorizoPicozo]

What’s bizarre is that in spite of their Bethesda and Activision acquisitions, it’s Fable, Perfect Dark and Gears E-Day seems the most intriguing to me.

and this is not only funny but basically the xbox meme of Halo, Gears, Forza but with a spin; still old IPs where the hope and hype come from nostalgia.

These releasing on PlayStation will be even more bizarre.

These reboots are meant to attract new consumers; the Play Station consumer.....what a tragedy to be an Xbox Fanboy.

 

[mayham2199]

That’s the problem, they don’t seem to address the issues as to why they can’t sell hardware. The same people remain and they switch strategies to see what sticks, using their allies/paid lackeys in the media to appear to support whatever it is they do next.

And it’s a shame because if they got their act together they could have an excellent alternative to PlayStation that I believe would do better in the market.

I think MS has come to the conclusion that the work they would need to do to beat Sony is to much and isn't even guaranteed to work anyway. They most likely see changing direction as a better alternative.

 

[Zacfoldor]

When will the Activision stuff have paid for itself?

$69 billion is what they paid I think. So I guess if they keep it up for like a decade+ it would eventually cover this cost. However, remember they didn't lose that money they have acti-blizz and could resell.

I think their plan is to grow the acti-blizz revenue to get paid back quicker, but it could also start doing worse(which is what it is likely going to).

MS for now has one major thing to do. Make sure acti-blizz revenue keeps at least the current pace.

It says in 1 quarter they generated $1.69B but that is likely revenue and not profit, can't pay back with revenue must pay back with profit. Also I'm sure the quarters vary wildly due to like Christmas, boxing day, so it is hard to know how long. That really shows why they cut staff, because they want that revenue and profit number to be as close as possible. This was definitely a looong term investment to see the payoff. They are getting paid right now in "popularity" for owning COD. Heck of a price to pay for COD and King no?

 

[dragonyeuw]

I said it the other day,but Xbox are in such a weird place right now......they keep grinding away though......because Microsoft.

They kind of have to, they have 70B in acquisitions to pay for. I don't see how they just release a standard next gen console though.

 

[Lagspike_exe]

Even assuming most positive scenario of new xbox launching holidays 2026- that is still long whole 2 years the xbox division gonna have to survive somehow

What's the point? Making faster hardware than Sony hasn't been working.

 

[Represent.]

So why are they making new hardware for this Holiday season?

If they actually cared about the hardware they would’t have a subscription service that discourages people from buying anything

 

[Esparadrapo]

The share of Series X vs Series S is higher and that makes the -29% translate to a higher loss in a unit count.

 

[Hero of Spielberg]

They kind of have to, they have 70B in acquisitions to pay for. I don't see how they just release a standard next gen console though.

Of course, they want it to make as much money as possible, but when a business like MS invest in something like this, the idea isn't always to 'pay it off'. In this case, it's a strategic asset that they now own, which generates revenue (from their competitors, too) attracts people to their services (they hope) and can be sold again if they want to.

 

[mckmas8808]

The share of Series X vs Series S is higher and that makes the -29% translate to a higher loss in a unit count.

Oh good point. That's interesting.

If they actually cared about the hardware they would’t have a subscription service that discourages people from buying anything

Maybe MS just doesn't know what they are doing.

 

[ZehDon]

Now I'm curious what a successful hardware platform looks like for Xbox as they transition into a third party. Does 30 million Xboxes in the wild achieve their goals?

 

[Esparadrapo]

From InstallBase:

Satya Nadella:
"unit sales on PlayStation and Steam sales also up 60% YoY."
"This speaks to our strategy of meeting gamers where they are by enabling them to access games on the screen they spend their time on."

 

[Woopah]

They had to pay a premium for those assets, so it’s not like that’s a fair market value

They certainly want an ROI overtime, otherwise if the cash flows are collapsing so will the book value

They'll absolutely want to see a return, but its not like they need to pay it off by having ABK's profits reac

Yes but they can't sell more hardware that's the problem. In fact they are selling less hardware than ever (except the original Xbox). So they've decided to switch gears and focus on other areas where they can grow Xbox. They'll continue to support\release hardware but it's clear that they are focusing on growing in other areas and will keep the hardware around to continue pulling in revenue from the users who are still committed to that ecosystem.

They are finding ways around it, but that doesn't stop hardware being something they care about. Hardware has a direct impact on their first party, third party and subscription revenue.

 

[mayham2199]

They'll absolutely want to see a return, but its not like they need to pay it off by having ABK's profits reac

They are finding ways around it, but that doesn't stop hardware being something they care about. Hardware has a direct impact on their first party, third party and subscription revenue.

I agree I wouldn't say they don't care just not their main focus anymore.

 

[James Sawyer Ford]

From InstallBase:

Nadella once again suggesting everything is coming to PlayStation

 

[mckmas8808]

Now I'm curious what a successful hardware platform looks like for Xbox as they transition into a third party. Does 30 million Xboxes in the wild achieve their goals?

Not even close!

 

[ZehDon]

Not even close!

How so?

 

[Luminoth-4545]

For hardware -29% is a softer decline then their previous quarters, i have it at around 1.2 million shipped for this quarter.

My estimates

Shipments (millions of units)

 

[NEbeast]

Looks like the acquisition is working.

GG Phil.

 

[twilo99]

So it was flat without activison.

If you take out everything else but just look at console sales they are mega down, and really, if you think about it that’s the most important metric so who cares about the rest of Xbox.. whatever that is

 

[jm89]

 

[SweetTooth]

adamsapple reaction to this disaster:

 

[kazuyamishima]

Content and Services will be flat next quarter even with COD + Indy + Flight Simulator + Stalker.

And as Welfare said, either they're expecting not to sell too many units this quarter or they'll do a massive discount for Xbox Series X/S this Holiday since they expectations seem low.

 

[Topher]

Now I'm curious what a successful hardware platform looks like for Xbox as they transition into a third party. Does 30 million Xboxes in the wild achieve their goals?

If sold for profit, absolutely. My guess is the days of trying to hit some 80-100 million sold (at loss) target is long gone for Xbox.

 

[Fafalada]

I wonder how much money Candy Crush is pulling in.

Still over 1b/year. Basically its MSs biggest IP after COD.

 

[twilo99]

They had to pay a premium for those assets, so it’s not like that’s a fair market value

They certainly want an ROI overtime, otherwise if the cash flows are collapsing so will the book value

Sure, but most people here seem to think that they threw 70 biggies into the abyss…

What’s the market value of the Activision asset today?

What’s the market price of Mojang?

Bethesda?

The hope here is that they are all worth close to nothing, but the reality is very different.

 

[jm89]

adamsapple reaction to this disaster:

GG Phil

 

[bitbydeath]

Is that worldwide?

 

[Iced Arcade]

they bought a 3rd party money printing company, the only reason anything is positive.

they couldn't market a console right if they did a GameCube $99 sale.

 

[ShaiKhulud1989]

Fits quite well with very vague comments about CoD on Gamepass from Nadella. Tells you everything you need to know, actually.

 

[Radical_3d]

 

[HeWhoWalks]

Based on the numbers we have then, Xbox consoles sold 28.3m through June 2024. If those latest figures are correct, that would put them at roughly 29.6m or so sold.

 

[Goalus]

The losers are the triggered one, i.e. you and the usual suspects.

 

[BennyBlanco]

Still over 1b/year. Basically its MSs biggest IP after COD.

That is mindblowing to me but I absolutely believe it. It’s crazy how much money is in mobile games.

 

[reinking]

If sold for profit, absolutely. My guess is the days of trying to hit some 80-100 million sold (at loss) target is long gone for Xbox.

I agree and will go even further to say it is starting to look like all console makers are no longer wanting to sell at a loss. I will be curious about the direction Sony takes with the PS6 when they are trying to balance performance to cost if they are trying to avoid taking losses on the hardware.

 

[GigaBowser]

REVENUE

 

[onQ123]

adamsapple reaction to this disaster:

This is actually good news for Xbox believe it or not.

They were losing money on Xbox Series hardware sales so the lower sales kept the profits from going down lol.

 

[DaleinCalgary]

I miss Flight simulator Phil.

Port

 

[Astray]

Now I'm curious what a successful hardware platform looks like for Xbox as they transition into a third party. Does 30 million Xboxes in the wild achieve their goals?

Depends on how much they are involved in the R&D, design, manufacturing and marketing of these consoles.

I think they make a new version of Windows that is gaming-first, then they license that and the Xbox brand to manufacturers like Asus or Lenovo to make handheld and console-like models, maybe do R&D on things like AI upscalers etc..

 

[Topher]

I agree and will go even further to say it is starting to look like all console makers are no longer wanting to sell at a loss. I will be curious about the direction Sony takes with the PS6 when they are trying to balance performance to cost if they are trying to avoid taking losses on the hardware.

Think you are right. Lack of competition will do that. I think Microsoft is sidestepping consoles because it just isn't working. Meanwhile, Sony not having a direct competitor in Xbox leaves them all alone in that space so there is really little reason to lose money on each console sold. Opposite reasons for this, but same result..

 

[ChiefDada]

When will the Activision stuff have paid for itself?

Below is a post I made in 2022. TLDR, it'll take some time.

Activision company wide operating income last year was 3 billion dollars. Assuming everything remains constant, it would take 23 years for this investment to break even. This is what I am trying to explain to people. It is a bold strategy that can't afford to adopt unnecessary risk such as implementing game pass exclusivity.

 

[Astray]

Think you are right. Lack of competition will do that. I think Microsoft is sidestepping consoles because it just isn't working. Meanwhile, Sony not having a direct competitor in Xbox leaves them all alone in that space so there is really little reason to lose money on each console sold. Opposite reasons for this, but same result..

It's not just lack of competition.

COVID has shown everyone that enthusiasts are willing to pay more than execs expected. That and they really don't gain much from converting the one game audience through permanent price cuts, much more efficient to do periodic price cuts and get what they need that way.

 

[Jaybe]

43% growth with a 43% impact from Activision
Is this the last quarter they can play the growth game thanks to Activision?

What’s interesting is the Activision Blizzard side of the business has been declining double digits year over year (2024 vs 2023) the last two quarters, it’s just not being reported on. The biggest driver being MW3 selling less than MW2 and no Diablo this year.

Same with the longer trend.

We have this quarter as 1.69 Billion for Activision blizzard.
We didn’t get the comparable last quarter in 2023 for ABK since acquisition happened mid october, they didn’t report.

For the quarter ended September 30, 2022 , Activision Blizzard's net revenues presented in accordance with GAAP were $1.78 billion ,
as compared with $2.07 billion for the third quarter of 2021.